Citation

Discussion Paper Details

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Title: Reserves For All? Central Bank Digital Currency, Deposits, and their (Non)-Equivalence

Author(s): Dirk Niepelt

Publication Date: July 2018

Keyword(s): CADcoin, CBDC, e-krona, e-Peso, Fedcoin, J Coin and narrow banking

Programme Area(s): Financial Economics, International Macroeconomics and Finance, Macroeconomics and Growth, Monetary Economics and Fluctuations and Public Economics

Abstract: I offer a macroeconomic perspective on the "Reserves for All" (RFA) proposal to let the general public use electronic central bank money. After distinguishing RFA from cryptocurrencies and relating the proposal to discussions about narrow banking and the abolition of cash I propose an equivalence result according to which a marginal substitution of outside for inside money does not affect macroeconomic outcomes. I identify key conditions on bank and government (central bank) incentives for equivalence and argue that these conditions likely are violated, implying that RFA would change macroeconomic outcomes. I also relate my analysis to common arguments in the discussion about RFA and point to inconsistencies and open questions.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13065

Bibliographic Reference

Niepelt, D. 2018. 'Reserves For All? Central Bank Digital Currency, Deposits, and their (Non)-Equivalence'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13065